Historic Cleveland mansion eyed for kids' museum

Millionaire's Row laden with debt might get new life as children's museum

9/23/2013

BY MICHELLE JARBOE McFEECLEVELAND PLAIN DEALER

Stager-Beckwith mansion.

CLEVELAND, Ohio — The last 19th-century mansion standing on Cleveland’s former Millionaire’s Row might get another shot at life, after a tangled decade that started with high hopes for renovation and ended with the prospect of foreclosure.

In an unusual transaction, the city of Cleveland plans to take possession of the empty Stager-Beckwith mansion and sell it to Michael Chesler, a local developer who aims to remake the historic house for the Children’s Museum of Cleveland.

The deal, approved by Cleveland City Council on Monday, would avert a foreclosure sale of the Euclid Avenue property to pay off nearly $550,000 in overdue taxes. If Chesler’s plan works, it could provide a bit of salve for the city — which is set to lose more than $4.5 million on a bad loan to the house’s current owner.

“We really want to see the building preserved and utilized for something that will benefit the whole neighborhood,” said Tracey Nichols, the city’s economic development director. “We don't want to take the risk of a sheriff's sale.”

The Stager-Beckwith mansion’s story starts in the 1860s, when the house was built for an executive at the Western Union Telegraph Company. The recent turmoil germinated in 2003, when an affiliate of the Ferchill Group of Cleveland bought the house for $1.9 million and renovated it for Myers University.

The mansion, the longtime home of the University Club social club, was the centerpiece of makeover for Myers, a business school whose leaders envisioned a growing campus in Midtown.

Fast-forward five years, though, and Myers was bankrupt. The Ferchill Group, which renovated the building as part of a $10.5 million project, was left holding the 66,000-square-foot house.

And the city, which borrowed $5 million in federal money and lent it for the Myers project, looked unlikely to recoup the cash. Making matters worse, the loan was non-recourse — meaning the city could only take back the property, not chase down the owner for the unpaid debt.

For five years, the mansion has been sitting empty.

The owner, a Ferchill Group affiliate called Stager-Beckwith Associates Ltd., owes more than $4.7 million on the city loan. Public records show Stager-Beckwith also hasn't been paying property taxes to Cuyahoga County.

Developer John Ferchill shrugs off any responsibility, painting himself as a conduit for the Myers deal — a deal he now says was troubled from the start.

“It didn’t work,” Mr. Ferchill said. “We did it strictly for them. We didn’t have any responsibility. We still have spent a lot of money keeping it clean. We know it was a city mortgage that we didn’t have any liability on. But we still cut the grass and kept the heat on.”

Late last year, the county filed a foreclosure lawsuit against Stager-Beckwith Associates, setting the mansion on a course to be sold to the highest bidder. The city faced a double loss — the loan money, already as good as gone, and control of a rare lingering remnant of Euclid Avenue's gilded heyday.

Several years of marketing and a 2012 city request for proposals from developers produced no results. Then, at the last minute, the possibility of turning the building into a museum popped up. And Chesler, the president of the Chesler Group of Russell Township, stepped in.

“It’s the last of the Mohicans,” Chesler said of the mansion. “It’s the last one.”

Under the deal approved by City Council, the city will take back the mansion from Stager-Beckwith Associates and sell it to Chesler for $1 million -- most of the money up-front, and the rest in two payments over 10 years.

The city will pay the delinquent taxes and send the remaining money to the U.S. Department of Housing and Urban Development, the source of the original loan funds for the Myers project.

“We’re doing our best to try to put together a deal that brings a little bit back for the city and that preserves the building for an end user that we think people will be very pleased about,” Nichols said.

Plans for the Stager-Beckwith property are still coming together, and they’re not a sure thing. Initially reluctant to go public, the Children’s Museum eventually confirmed that the mansion is on its short list of possible new homes.

After 27 years of renting a former Howard Johnson’s restaurant in University Circle, the museum is ready to move. Its 11,000-square-foot space is too small, when compared with the footprint of other children's museums in similarly sized cities.

Maria Campanelli, the executive director, believes the museum could boost its attendance — now 100,000 visitors a year — in a bigger, better building with new exhibits.

The museum’s current land, just off Euclid and Stearns Road, might be more valuable for another use.

An unidentified developer is looking at the site, owned by neighborhood nonprofit University Circle Inc., for a mixed-use project that would include housing. University Circle Inc. has been helping the children's museum evaluate other possible locations in and near University Circle.

“It’s very early for us,” said Campanelli, who stressed that the museum still is studying its choices and has made no commitments. “There are so many pieces-parts to any move. We're comprehensively reviewing this option and others before we make the decision about what's best for the museum.”

She would not identify other potential sites.

But Campanelli said the Stager-Beckwith house is attractive because of its 3813 Euclid Ave. location, between downtown Cleveland and University Circle; nearby freeways; and abundant parking on nearly 3 acres.

With elaborate crown moldings, an expansive ballroom, a wood-paneled library and ornate chandeliers, the mansion has a sense of magic about it.

Walking around the space with Chesler, who waxes poetic about historic buildings, it's easy to imagine children running up the grand staircase or splashing in a water exhibit in the old commercial kitchen, once used for a Sammy's catering and events facility.

“You can create this tremendous fantasy with this extraordinary building, for a little kid to look up and see the ceilings,” Chesler said.

In several rooms, though, those ceilings are shedding plaster.

Stained paint shows where water crept in and ran in rivulets down the walls. Less than a decade after the Myers renovations, which won accolades from the preservation community, evidence of leaks abounds.

Chesler believes the mansion needs a new roof -- technically, several -- to cover the original house and a series of expansions.

The roof work would be a substantial part of what Chesler describes as a $4 million to $6 million project, including the acquisition. He hopes to use federal tax credits for historic preservation and is seeking similar state tax credits. The next round of state credits, which are competitive, will be announced in December.

Chesler also is talking to the city and the county about the roof repairs.

Under his plans, the museum would occupy just over half the mansion and would sublease space in the 1913 expansion, on the north side of the building, to early-childhood nonprofit groups and other complementary tenants. And they would rent out the attic apartment, a loft suite created for former Myers President Paul Feingold and his wife.

“Quite frankly, this is not a very profitable deal for us,” Chesler said. “But we love the building. I like the tenant. I like the challenge. And it fits our profile, so we’ll try to make it work.”

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